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<\/a><\/p>\nShares of the company, which changed its name from Facebook to Meta in October, surged more than 780% from the IPO through the end of last year, handily beating the S&P 500 and the Nasdaq 100. Revenue rose 23-fold in that time.<\/p>\n
However, with user growth stalling, the company has lost half its value this year, trading now at 12 times earnings versus a multiple of 20 for the Nasdaq 100 and 16 for the S&P 500.<\/p>\n
Meta \u201cis a deep value stock,\u201d said Alex Umansky, a global equities portfolio manager at growth investor Baron Capital.<\/p>\n
The company is getting hit on many fronts, including a \u201cmassive brain drain,\u201d regulatory crackdowns and, most crucially, slowing user growth, because everyone who wants to be on Facebook, WhatsApp or Instagram already is, said Umansky, whose fund owned the stock from its 2012 debut until the end of last year.<\/p>\n
Brokerages estimate that the social media giant, which makes nearly all of its revenue from digital ads, will increase its revenue by 6.8% this year, the slowest pace ever, in part because of a slowing economy. They see growth picking up to around 15% in each of the next two years.<\/p>\n
To be sure, the Facebook parent still has the best gross profit margin among megacap peers Apple Inc, Amazon.com Inc, Netflix and Alphabet Inc. If investors become more confident that growth will pick up again, and award the company the same valuation as the Nasdaq 100 based on estimated earnings for the next four quarters, the stock would trade at about $277, or 63% above Friday\u2019s closing price of about $170.<\/p>\n
\u201cWe\u2019re with the market in being cautious in the short term but are extremely optimistic in the long run,\u201d said Global X research analyst Tejas Dessai.<\/p>\n
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